Fintech 2026

GERMANY Law and Practice Contributed by: Stephan D. Meyer, Lars Fidan, Elisa Otto and Christian Meisser, LEXR

2.3 Compensation Models German fintechs use a range of compensation mod - els: transaction fees, subscription pricing, spread- based models, interest margins and commissions. The choice is driven as much by competitive posi - tioning as by regulation, though the disclosure require - ments differ considerably depending on the service classification. MiFID II imposes the strictest disclosure regime on investment services. Firms must provide ex-ante and ex-post cost information covering all direct and indi - rect charges, inducements and third-party payments. This granularity often creates a real operational burden for smaller fintech firms. Payment service providers under the ZAG must disclose all fees before transac - tion execution. For consumer credit, the annual per - centage rate must appear prominently. For crypto-asset services, MiCA requires transpar - ent, non-misleading pricing disclosure before client onboarding. While the specific requirements are less prescriptive than MiFID II, BaFin’s expectations are moving toward comparable standards. The bar for pricing disclosure will continue to rise across all ver - ticals. 2.4 Variations Between the Regulation of Fintech and Legacy Players In principle, German regulation draws no distinction between fintech companies and legacy players. The same activity triggers the same licensing and compli - ance requirements regardless of the provider’s size, history or technology stack. A neobank offering cur - rent accounts faces the same KWG requirements as a 200-year-old savings bank. In practice, however, differences emerge in two direc - tions. BaFin uses the principle of proportionality to calibrate supervisory intensity. A fintech with a narrow product offering and limited systemic relevance will face less demanding day-to-day supervision than a large universal bank, even though both operate under the same licence. This proportionality gives smaller firms room to scale before facing the full weight of supervisory expectations.

prompted both sides to re-evaluate governance and compliance responsibilities. A notable shift over the past two years has been the rise of B2B fintech. Payment infrastructure provid - ers, compliance automation platforms and embed - ded finance solutions are increasingly the growth drivers, as the B2C segment faces margin pressure and higher customer acquisition costs. At the same time, traditional institutions are building or acquiring fintech capabilities in-house, in areas such as digital asset custody, tokenised deposits and AI-driven risk management. 2.2 Regulatory Regime Germany has no separate fintech regulatory frame - work. The regime depends entirely on the services provided. A fintech offering payment services faces the same licensing requirements as a major bank run - ning the same business line. The core regulatory pillars: the Banking Act (KWG) for deposit-taking and lending, the Securities Institu - tions Act (WpIG) for investment services, the Payment Services Supervision Act (ZAG) for payments and e-money, and the Insurance Supervision Act (VAG) for insurance. MiCA has governed crypto-asset services since 30 December 2024, replacing the earlier national regime under the KWG. The complexity lies in the layering of national and EU regulation. MiCA, DORA and MiFIR apply directly as EU regulations, while PSD2 requires national transpo - sition through the ZAG. Many fintech business mod - els span multiple regimes. A company offering crypto exchange services alongside fiat payment processing may simultaneously need CASP authorisation under MiCA and a ZAG licence. Navigating these overlaps is one of the central challenges for market participants. BaFin supervises across all regimes, supported by the Bundesbank. At the EU level, MiCA, DORA and MiFIR increasingly set the substantive requirements, while national law governs licensing procedures and supervisory practice.

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